No problem spotting the moral from today's YouTube story about the Swiss couple who were insulted in a local tongue while renewing their wedding vows in the Maldives: don't go near a contract in a language you don't understand.

Nearer to home, is our coalition making the same mistake with its package of spending cuts, which seem to be unravelling in lively ways? After all, it's what overpriced investment bankers did when they chopped up sub-prime debt and sold it on in shiny wrapping paper.

When mayor of London Boris Johnson, a media-savvy rascal, uses a disgracefully emotive phrase like "social cleansing" to describe changes to housing benefit changes we can be sure ministers have a problem.

As for the abolition of top-rate child benefit, even the FT carries a page one story today about the reform – small change to the Pink 'Un's readers – because it threatens husbands with fines if their wives are less than frank about claiming the cash.

Teething trouble? Probably, though ministers who want to simplify tax and benefits seem to be busy doing just the opposite. At least FT readers – cover price £2 a day – understand these irritating requirements and can afford the loss.

Housing benefit reform looks rather trickier. The Guardian is full of alarm again today, alarm more gently reflected in other papers thanks to Boris's colourful intervention: "We will not accept a kind of Kosovo-style social cleansing of London … On my watch you are not going to see thousands of families evicted from the place where they have put down roots."

Good for him, says me. Except that using the Kosovo analogy, even when one feels strongly, is impossible to justify. Ken Livingstone, Johnson's predecessor, committed the same casual gaffe when Tory Wandsworth started decanting its poorer residents to nearby Merton.

But the term "cleansing" – usually "ethnic cleansing" – around the world has come to mean terror and even death. Whatever happens in London as the coalition's policy unfolds – or unravels – it will not be ethnic cleansing.

Coalition social housing policy seems to start from a reasonable position. Ministers want to build more affordable homes – though ex-housing minister Nick Raynsford nailed David Cameron yesterday for misrepresenting Labour's record – and need to generate some savings, £2.5bn to be precise, to help pay for it.

They have a point, as do their tabloid allies, in suggesting that a system that can pay over £50,000 a year in extreme cases to house families in London is in need of reform. But councils do not fork out such money (they reclaim it from the DWP) just for fun. They have statutory duties towards the homeless and they are administering a scheme which was created by the last Tory government in 1992.

In the old days, housing subsidies went into bricks and mortar. Under the 1992 Social Security Contributions and Benefits Act, the subsidies were redirected at people. It was a well-intentioned reform; they usually are. But attempts to reform or at least contain it failed. It cost around £12bn a year by the time Tony Blair came to power, £21bn now.

Why so? Do you suppose it has something to do with Britain's overheated housing market, a prime cause of the credit bubble that helped bring down the banking system that fed it, propped up by Asian savings bearing low interest costs? Yes. China now has the same trouble incidentally, as Japan did before its 90s crash.

So reports today that average UK house prices are down £2,376 are good news – provided they don't suddenly collapse as they have in many parts of the US. That would cause real trouble.

But we are where we are. House prices have been allowed to rise too far, with the result that landlords need to charge more to cover their own costs. The taxpayer has created many multi-millionaire landlords out of housing benefit, and successive governments have tried to cap it.

As for councils – housing associations too – they are tempted to see both valuable land and stock as a way of easing their own financial problems that coalition cuts are about to make much worse. It is a vicious circle.

When Mayor Boris says he doesn't want to see poor families driven out of London's richer boroughs, he's right. The rich – and the merely comfortably off – need people to service their needs, from waiters and cleaners to nurses and teachers – and mixed neighbourhoods are an attractive part of the answer, socially healthy too.

Alas, the attractively mixed neighbourhood of one decade rapidly becomes the stiflingly rich and exclusive neighbourhood of the next. Chelsea was for the poor and for bohemians before the second world war. Islington's lovely 18th and 19th century houses were once run-down and neglected, well into the 1970s. Ditto Notting Hill, where I once lived in Portobello Road – but fled because I could see what was coming. Watch out, Hackney!

In those days, councils and housing associations provided subsidised housing for poorer citizens, gradually driving out slum landlords like Peter Rachman in Notting Hill, one of the villains of the age. The W11 postal district is now so cosmopolitan and chic that most of David Cameron's so-called "Notting Hill set" actually lives further up the hill in more downmarket W10, Notting Dale and suchlike. I think he did himself until he moved to No 10. That Richard Curtis/Hugh Grant romcom of the same name won't have helped.

Alas, the Thatcher government stopped councils, especially Labour ones, building more and more housing – admittedly some of it the wrong sort in the wrong places. It also passed the responsibility over to "third arm" non-profit housing associations, deemed to be better run and more responsive, though as they got bigger in consequence of government policy and mergers they became less so.

In rich Westminster, Dame Shirley Porter was later found to be decanting poorer tenants to other boroughs to improve Tory prospects of holding marginal wards. Naughty Shirley skulked in Tel Aviv for a number of years.

In any case, Thatcher and Michael Heseltine had also begun the process of selling council houses and flats to tenants at spectacular discounts. Much to be said for it too, a rare chance for life-changing social mobility for many, though others got shafted buying duff stuff they couldn't sell on.

It would have been fine if councils were allowed to use the proceeds of those sales to build more homes, even better ones for low-income tenants. But they were blocked there too until recently. In office, Labour made its housing priority rehabilitating older homes, neglected in the tough 80s. So the shortage – which underpins our overheated UK market – was further exacerbated.

The housing minister, Grant Shapps, tipped by the Daily Mail as the next PM (so that's him finished) promises transitional money to ease problems and prevent families ending up on the street as an estimated 82,000 such families (17,000 on Whitehall estimates) are eased out of high-rent areas in central London to cheaper neighbourhoods on the outskirts of the capital.

Market forces have, of course, been doing this for a long time anyway. On buses and trains, early in the morning and late at night, there are plenty of service industry workers making long journeys to and from home.

Whether or not the coalition's plans to increase their numbers will lower or increase job opportunities seems doubtful. I don't dispute Shapps's sincerity; he's a smart fellow too. He thinks the proposed £400-per-week cap will push down rents. Well, it might do that too.

But the law of unintended consequences sometimes goes its own merry way. If I were David Cameron I'd worry about Boris aligning himself – yet again – on the other side of the argument. Who was it who said the mayor has it in him to become Britain's Berlusconi, the populist chancer with a winning gag for every escapade? Was it me?